Insurance fraud refers to false claims made to an insurance company, as well as to personal injury and property damage claims that are exaggerated so that their claimants can collect additional benefits. Such cases—including fraudulent automobile accident claims, phony workers’ compensation claims, arson for profit, faked deaths or life insurance claims, fraudulent healthcare billings, and catastrophe fraud—cost the U.S. economy more than $80 billion annually and result in more than $96 billion in yearly premium increases.
Types of Insurance Fraud
Auto Insurance Fraud
According to the Insurance Fraud Institute, the overwhelming majority of bodily injury insurance claims are exaggerated claims filed by ordinary citizens seeking reimbursement for high insurance premium costs—but these “padded” claims are what drive up premium costs in the first place and account for up to one-third of all insurance fraud cases. A small percentage of fraudulent automobile accident cases stem from staged accidents or inflated repair shop estimates. One example is if a driver slams on his brakes in front of another car in order to cause rear-end collision. In other automobile insurance fraud cases, body shop owners inflate estimates so as to profit from doing less repair work for more money.
Phony Workers’ Compensation Claims
Workers sometimes exaggerate injuries with the intention of receiving paid work leave or other benefits. In other cases, workers fake those injuries entirely or claim that an injury occurred in the workplace when it was really sustained at home.
Arson for Profit
Perhaps the most serious and dangerous type of insurance fraud occurs when one deliberately sets fire to a building, vehicle, or other piece of property in order to collect insurance benefits for lost property and valuables—some of which never existed in the first place.
Faked Death or Life Insurance Claims
Sometimes people fake their own deaths or the deaths of others so that they can collect life insurance policy benefits. After the 9/11 attacks on the World Trade Center, dozens of people filed fake death claims, attempting to capitalize on the tragedy.
Fraudulent Healthcare Billings
Unscrupulous doctors, medical professionals, or lawyers have been known to commit healthcare fraud by billing insurance companies for tests, X-rays, and office visits that never even took place.
Sometimes, victims of natural disasters, such as tornados and hurricanes, bill insurance companies for their losses, exaggerating the degree of damage or injury so that they can collect more benefits.
Insurance Fraud Penalties
Currently, only about one-half of U.S. states classify insurance fraud or attempted insurance fraud as a felony. For example, in Florida, staging a car accident is a second-degree felony and carries a sentence of two to 15 years in prison. In states where it is not a felony, insurance fraud is often prosecuted as bribery, theft, or forgery—with all felonies carrying sentences including fines and/or jail time. At the federal level, most insurance fraud cases are prosecuted under mail and wire fraud statutes, for which the sentences include significant fines and/or jail time.
Contact an Attorney
If you have been accused of fraud of any kind, please contact an experienced criminal defense attorney in your area today.